Supreme Court Raisin Decision Could Affect Market

June 24, 2015 By

Supreme Court Raisin Decision Could Affect Market

By Burt Carey

By an 8-1 vote, the U.S. Supreme Court this week found in favor of a family of California raisin farmers, ruling that the Fifth Amendment’s Taking Clause applies to personal property just as it does real estate.

At issue were the actions of the Raisin Administrative Committee, an extension of the Department of Agriculture, which required raisin farmers to turn over a portion of their annual crop so that it could artificially inflate raisin prices. In 2003, the committee demanded that Marvin and Laura Horne surrender 47 percent of their raisin crop for the New Deal-era marketing scheme, and in 2004 another 30 percent, all with no compensation.

“The Government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home,” Chief Justice John Roberts wrote in an opinion joined by of the justices except Sonia Sotomayor. While three of the court’s liberal justices concurred, they differed when it came to the question of how the Hornes should be compensated for their raisins, suggesting that the 9th Circuit Court of Appeals in San Francisco should determine the amount. It was a 9th Circuit decision the Supreme Court overturned in Horne v. Dept. of Agriculture.

Horne refused to turn over his raisins in 2003 and 2004, and was fined $684,000 by the committee. Two years ago, the Obama administration argued that the Hornes should be forced to pay the fine before their case could be heard. The Supreme Court disagreed on the procedural issue, allowing the case to proceed.

The justices ruled that the Hornes are entitled to just compensation for any raisins the committee takes from them. The committee operates under a 1937 law designed to manipulate raisin market prices. Made up of DoA bureaucrats and raisin industry executives, the committee would annually set a marketing order quota that would artificially control the number of raisins released to the market, which in turn drove up consumer costs.

Some 20 other agricultural industries operate under similar marketing schemes, all based on efforts for the federal government to control supplies and pricing. The raisin market differs from others in that the Department of Agriculture actually took possession of the crop, using them for school lunch programs or overseas sales. What impact the ruling has on other agricultural price-support programs is unclear.

“We are not going to jeopardize the Agriculture Department’s marketing order regime,” Roberts added. “This is different,” Roberts said to Agriculture Department attorneys during earlier oral arguments in the Horne case. “You come up with the truck, and you get the shovels, and you take their raisins.”

Also not immediately known is what the ruling will do to raisin prices. The Horne decision did not invalidate the Raisin Administrative Committee or its operations but requires that future takings of personal property by the federal government must come with compensation.

The 9th Circuit Court initially had ruled in favor of the committee, saying that the Taking Clause only applied to real estate.

Legal scholars commenting on the Horne decision say a victory by the Department of Agriculture could have set a precedent in that the federal government could effectively take the personal property of any citizen without having to pay for it. But even an ideologically divided Supreme Court wouldn’t go that far. Roberts recounted that property ownership predates the 5th Amendment and was rooted in American law even before British troops began looting colonists’ homes in the name of King George III.

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